Stock Plans in India

Overview
(Updated as of October 2026)

Companies offering stock compensation in India should be aware of the country's foreign exchange rules and restrictions.  There are some exemptions which allow employees to remit funds to pay for stock compensation, such as the exercise of stock options. The company may be required to submit semi-annual reports to the Reserve Bank of India.  Furthermore, the employees may be required to pay tax on remittances out of India above a certain threshold.

The taxation of stock compensation is straightforward except for two aspects. First, the fair market value of shares not listed on an India exchange must be determined by a Category One Merchant Banker. Second, whereas income tax withholding is required, social taxes are not applied to stock compensation in India.

Finally, be aware that the India tax year is from April 1 to March 31 of the following year. 

Overview of Stock Plans in India